Suze Orman Thinks a Recession Is Imminent. Make These 3 Moves to Prepare

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Economic conditions could get worse. How to gear up.

Key points

• Financial expert Suze Orman thinks economic conditions could deteriorate later this year or early next.
• You can prepare for a recession by cutting back on spending, adding to your savings, and maybe even getting a second income.

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The economy is plagued by inflation. It is strong, at least from a jobs perspective.

That may not last very long. Suze Orman is one of many financial experts who have warned about a recession. Orman made it clear that she expects economic conditions to get worse later this year or early in 2023. Job loss could become rampant once that happens.

That doesn't mean we will see the same level of job loss we did early in the Pandemic when unemployment levels reached a record high. Prepare for a period of financial instability and set yourself up to get through it. Here is how.

1. Cut back on spending

It will be easier to ride out a recession if you slash your bills. If you are currently committed to a set of expenses that stretch you financially, do your best to wiggle out of that situation.

If you have a lease on a $2,000 apartment that is coming to an end this summer, consider moving to a $1,500 apartment. If your cable and internet contract ends next month, you should check if there is a cheaper plan you can sign up for. If you spend a lot of money on takeout and restaurant meals, it is easier to add money to your savings.

2. Boost your savings

Financial experts say you should have enough money in an emergency fund to cover living expenses for three to six months. Orman thinks that workers should aim higher and try to save enough money to pay their bills.

The higher threshold could be useful during a recession. If you lose your job, your heating system needs to be replaced. You could be looking at months without a paycheck and a costly home repair. It is important to save as much money as possible while your job is intact.

3. Get a backup income source

You may be employed now. If the economic situation gets worse, that could change. Setting yourself up with a second income stream is a good idea. If you do work from home or a weekend position, you could potentially ramp it up. If your main paycheck goes away, that extra job could be a lifesaver.

We can't predict when a recession will hit, but Orman isn't the only financial expert who thinks conditions will get worse soon. It pays to prepare for an economic downturn even if you have to make lifestyle changes in the near term.

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